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TMI Blog2023 (1) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. From the order sheet, it is evident that ample opportunities were given to the assessee and the case has been adjourned for number of times. That as regards present date of hearing, a notice was served through RPAD which had returned unserved. Said notice of hearing was served through D.R"s office. With this background, we take on record the submissions of the ld. D.R, relevant orders of the subordinate authorities and adjudicate the case on merits. 3. The relevant facts of this case are that the assessee is engaged in the business of developing Hydro Power projects on BOT basis, for Govt. of Maharashtra. It filed return of income on 15-10-2010 declaring total income of Rs. 9,16,485/-. The case was selected for scrutiny and the total income of the assessee was determined at Rs. 2,19,32,170/- after making addition of Rs. 2,10,15,680/- to the total income returned on account of short term capital gains. A survey action u/s 133A of the Income-tax Act 1961 (hereinafter referred to as "the Act") was conducted in the business premises of the assessee on 27-01-2010. On examination of books of account found during the survey, it was noticed that the assessee was awarded a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration, the assessee has received an amount of Rs. 4,37,00,000/- out of total sale consideration Rs. 4,87,00,000/- for transfer of said project which was 90% of total consideration. As per the A.O said RMMTL has incurred substantial amount of expenditure at the site. Thereafter the A.O came to the conclusion that the assessee has transferred the possession to the transferee who has commenced the work relating to the said project. In view of these developments, the A.O concluded that the assessee has handed over the possession of the project to RMMTL and the transferee has started its work at the site and paid 90% of total consideration. The A.O emphasised that major risk and reward associated with the project has been transferred during the year itself and the transferee has taken possession of the property and done some act in furtherance of the contract. Therefore, according to the A.O there is transfer of property as per section 2(47) of the Act and the gains from the transaction are liable to be assessed u/s 45 of the Act. As the assessee has held the capital asset for less than 36 months immediately preceding the date of its transfer, the gain was brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transferee has also commenced the work on the project and therefore the said gains on transfer of the project is liable to be assessed under the head 'short term capital gains' for the year under consideration. Therefore, the first point for determination in the present case is timing of recognition of income from transfer of subject Hydro project to RMMTL viz. whether it is in the year of signing of MOU on 30.10.2009 or in the year of approval from the WRD, State Govt. on 03/06/2011. In the first place it is to be mentioned that during the survey operation u/s 133A in appellant group of cases, a sum of Rs. 1,61,00,000/- was declared as additional income on account of offloading of subject project by the appellant. The relevant question and answer from the statement dated 27/01/2010 of Shri klshor Mahadeo Howale, one of the directors of the appellant company is extracted below: Q.6 Please state about the project under Arch Hydro Power Project Pvt. Ltd.? Ans: I am director in Arch Hydro Power Projects Pvt. Ltd. and the said company has taken a project on .BQT basis at Ambai Hydro Project, Kolhapur in year 2007. Against this project the company had spent about Rs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,81,541/- 2012-13 55,550/- 4.3.3 Thus, the transferee has taken over the subject project by virtue of MoU (clause 7of the MoU) and has also done some act in furtherance of the understanding in the MoU. The Memorandum of understanding (MoU) for transfer of project entered on 30-10-20209 was also in the knowledge of the State Government even before the format approval is accorded for the transfer by the State Government. Therefore, it is difficult to accept the contention of the Ld. counsels that 'significant risk and rewards' are not transferred in spite of signing MoU which is legally enforceable contract and receipt of 90% of consideration from RMMTL and taking over the project by RMMTL. Thus, in the instant case, the MoU results in or coincides with the transfer of significant risks and rewards of ownership to the buyer and therefore the revenue from the transfer of subject project has to be recognized in the year of signing the MoU i.e. year under consideration. Expectancy of Ultjmate realization: 4.3.4 As per the Accounting Standard-9, the other criterion is that the revenue should be recognized when it becomes measurable and the surrounding circumstances give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of this project. Provisions of sec. 2(47) and see. 53A of T P Act, referred by the Assessing Officer, deal with a situation of transfer of an immovable property or interests in the immovable property and the present case relates to transfer of interest in the Hydro Project and such a transfer cannot be subjected to provisions of TPA and see, 45of the I. T. Act. Further, the decision in the case of CIT vs. Podar Cement P. Ltd. (226 ITR 625)(SC){ referred by the Assessing Officer, cannot be applied to the facts of the present case as what is transferred in the present case is creation of .a hydro project i.e, interest in the Hydro Project and not land or property per seas in the case of the Podar Cement's case. Therefore, in my considered opinion the- profits and gains arising from such transfer of interest in the subject project is liable to be assessed under the head 'income from business' as the appellant is in the business of execution and development' of such projects and the interest in the project was transferred/assigned to RMMTL in the course of business of the appellant. Accordingly, the Assessing Officer is directed to assess the gains of Rs. 2,10,15,680 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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